SE Asian rubber trade slow on holidays

SE Asian rubber trade slow on holidays

SINGAPORE (Reuter): The pounding taken by regional currencies from speculators and a holiday on Monday in Thailand and Japan will keep the Southeast Asian rubber market quiet this week, rubber dealers said.

Major consumers in the U.S. and Europe were away for the summer holiday season, compounding the situation, they said.

"The (Indonesian) rupiah, along with some other regional currencies like the (Malaysian) ringgit, has come under attack. I think we should stay out of the market until things settle down a bit," one trader in Indonesia said.

"It's a bearish market. Offtake is weak and consumers are living on a hand-to-mouth basis. The holiday today in Thailand and Japan will keep the whole thing soft," a dealer for a rubber trading house in Singapore said.

Buyers in Thailand, the world's biggest natural rubber producer, stayed out of the market.

"Buyers have very bearish views so they bid at unreasonably low prices which most shippers are reluctant to sell," said a trader in the Thai rubber center of Hat Yai.

"A weaker baht was also one of the reasons why they gave such low bids. But, surprisingly, I heard some shippers agreed to sell," he said.

An executive of a company in Singapore involved in trading rubber in the region said the supply of rubber continued to run ahead of demand.

"There's just too much raw material around here," the official said. "I expect INRO (International Natural Rubber Organization) will have to intervene sooner or later."

The rubber trade has been waiting to see if INRO will step into the market to shore up sagging rubber prices after its five- indicator price slipped two weeks ago below the 'may-buy' level of 183.00 Malaysian/Singapore cents a kg.

Most of the trade believes INRO will intervene if the price approaches the 'must-buy' level of 172.00 cents.

The Thai benchmark RSS3 for October delivery was quoted around 92-97 U.S. cents a kg FOB Bangkok while December RSS3 was quoted around 92-98 cents a kg on the same basis.

In Indonesia, offer prices were quoted at 43.50 cents a kg for August shipment FOB Padang, 44.50 cents FOB Medan for October shipment, 44.00 cents FOB Surabaya for August shipment and 43.75 cents for August shipment FOB Pontianak and Jambi.

Malaysian traders said rubber prices may remain steady or even rebound a little this week, but that it would depend heavily on the movement of the ringgit against the U.S. dollar.

"The prices have gone up quite a lot and I think it should either hold at this level or ease off a bit," a trader said.

The ringgit fell to a three-year low on Friday, closing in Kuala Lumpur at 2.6120 to the dollar. For the whole of last week, the Malaysian unit tumbled about four percent against the greenback.

Traders said although this made Malaysian rubber more competitive against Thai and Indonesian origins, the fall was too fast for the market to grasp.

The Malaysian Rubber Exchange and Licensing Board quoted the benchmark RSS1 buyer for August at 236 Malaysian cents a kg at the close of the market last Friday, up seven cents from the previous week.

The board quoted SMR20 for August buyers four cents up from the previous week at 237 cents a kg. Traders quoted the SMR 20 on Friday at 241 cents, SMR CV at 295 cents, SMR L at 277, SMR5 at 248 cents, SMR10 at 242 and drum latex at 193 cents.